THE LOCAL HEAD of commercial real estate firm Jones Lang LaSalle says the country could “quite possibly” be headed for another property bubble.
Jones Lang LaSalle Ireland managing director John Moran yesterday told the Oireachtas Banking Inquiry the commercial property sector wasn’t in danger yet – but that may soon change.
He was responding to a question from Fine Gael TD Kieran O’Donnell, who asked if Ireland could have another property bubble based on the current market.
“Much of the investment taking place is with equity rather than debt,” Moran replied.
“The general financial circumstances of the global market – it is not often we use the term ‘global market’ in Ireland’s case – are that there are significant amounts of equity seeking homes and a yield in the absence of decent returns elsewhere.”
Moran said the general economic situation in Ireland supported a “reasonably performing property market”, but if that changed – through another financial “shock” or a big rise in interest rates – prices would drop again.
Are we at the bubble stage? Not just yet. Am I concerned that we might be getting there? Quite possibly.”
Jones Lang LaSalle handles everything from property valuation and industry research to sales and letting services through its different arms.
‘Risks in the market’
Earlier Moran, who mainly took the inquiry through developments in the commercial property sector in the lead-up to the crash, said his firm started to warn clients to sell as early as 2005 – advice which proved unpopular as prices went up another 40% in the next few years.
“As 2007 and 2008 developed, we saw that there were risks in the market,” he said.
The warning signs were a shallowing of the depth of bidders in the market, a shallowing of the depth of occupiers and the fact that house prices had started to wobble.”
But he said it was up to the firm’s clients to apply its recommendations to their investments as they saw fit and the company had no role in anyone making decisions against the company’s advice.
“The responsibility for this lies with the property owners and, we assume, their bankers,” he said.
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